British housebuilders reported positive sales in recent weeks, adding to signs of stabilisation in the housing market in the face of severe economic uncertainties.
* Persimmon says sales reservations up 6pct in last 10 wks
* Says H1 turnover 715 mln stg vs 785 mln
* Morgan Sindall says positive trading in affordable housing
* Galliford Try reports annual housing completions up 27 pct (Recasts, adds CEO comment, shares, trading updates from Galliford Try and Morgan Sindall)
Persimmon Plc , Britain’s largest volume housebuilder, said on Tuesday it expects a recovery in sales in the second half of the year, after private sales reservations rose 6 percent year-on-year in the past 10 weeks.
“We’ve seen a fairly stable market, and we’ve seen a continuation of improvement of our level of sales since the start of the year,” Persimmon Chief Executive Mike Farley told Reuters.
The comments came as construction group Morgan Sindall confirmed a “slight improvement” in market conditions and positive trading in affordable housing, while Galliford Try reported annual housing completions up 27 percent to 2,170 units.
Analysts says a chronic lack of housing in the UK would continue to act as an underlying prop to housebuilders and the housing market.
“Historically low interest rates, a marginal improvement in mortgage availability and the still-constrained supply of second-hand homes for sale have all enabled Persimmon to advance its own recovery,” said Keith Bowman at brokerage Hargreaves Lansdown.
Last week, rival Taylor Wimpey reported stronger margins and said it expected analysts to raise their full-year profit forecasts for the company.
MORTGAGES, MARGINS
But tight credit conditions remain a thorn in the side of an industry that has seen housing output in the UK shrink to record lows, prompting lenders and housebuilders to get together to thrash out solutions.
“The discussions are at any early stage, but the good thing about it, is that it’s been recognised by the lenders, that it’s a 95 loan-to-value (LTV) product that is required,” said Farley. “The difference now is that there is a genuine will from the lenders to come up with a solution to this issue”.
The Home Builders Federation told Reuters on Monday that the only viable long-term answer had to involve insurers underwriting loans to first-time buyers, rather than the latter having to put down hefty deposits, as lenders show little appetite to loosen their purse strings due to regulatory constraints on what they can lend.
But there is some hope for the housebuilding industry, with a number of government initiatives announced in recent months and a slight improvement in product availability.
“We have seen on the ground that there has been some marginal improvement in availability of mortgages, particularly higher LTVs,” said Farley.
Persimmon said it continued look to higher profitability.
“Our focus remains improving our margins, at 9 percent we still have a way to go,” said Farley, after underlying operating margins crept higher from 8 percent last year in the first half.
“We are generating good cash, which allows us to reinvest in the business … and to grow the business as and when the mortgage market allows,” he added.
Persimmon’s completions dipped to 4,439 homes in the six months to end June, against 4,657 in the same period last year, due to slowdown in activity at the start of the year. Turnover fell to 715 million pounds ($1.14 bln) from 785 million.
Shares in York, northern England-based Persimmon were down 0.7 percent at 0923GMT, while Galliford was down 1.6 percent and Morgan Sindall shares were 1.7 percent lower. ($1 = 0.626 British Pounds)
(Reporting by Lorraine Turner; Editing by Myles Neligan and David Holmes)
From http://www.reuters.com/article/2011/07/05/persimmon-idUSL3E7I50NG20110705